CEO Tips · Going Global Season | In the AI Era, How to Excel in Cross-border E-commerce?

Every workplace professional aspires to be a "slash youth". Is cross-border e-commerce the "selected" side business? For ordinary people, is there still an opportunity in cross-border e-commerce? With the explosion of AI, what available tools and services are brought? What advantages does AI + cross-border e-commerce still have?

At 7 pm on October 23rd (Wednesday), the 36Kr Live Studio invited Li Chun, Co-CEO of DHgate Group, and Dabing, Partner of LinkFox AI and Partner of Ziniou Browser, to join to discuss: In the AI era, how to do cross-border e-commerce well?

This live broadcast mainly focuses on the following issues:

1. From an overall perspective, is cross-border e-commerce a blue ocean or a red ocean? Or are there differences in different regions, consumption habits, and product types?
2. In the early stage, cross-border e-commerce mostly started with B2B, and now it is more transforming to 2C. What are the reasons for this shift? What does it reflect behind it?
3. The B2C model highlights the goods themselves, and the popularity of hit products leads many enterprises to flock to become suppliers of a certain single commodity. Will this situation cause enterprises to lose the opportunity to "build a brand"?
4. In recent years, it is not uncommon for celebrities and well-known anchors to enter the cross-border e-commerce field. What trend does this reflect behind it?
5. The intergenerational development and the rise of social platforms have given rise to new e-commerce models such as short videos and live broadcasts. What changes have occurred in users' consumption habits? What advantages should sellers seize?
6. According to the report data: More than 70% of sellers are using AI tools to assist in operations. Which tool products have achieved explosive growth?
7. Give three pieces of advice to sellers and entrepreneurs who expect to enter cross-border e-commerce?

The following is the conversation between the two guests and 36Kr, and some of the content has been sorted and edited:

36Kr: From an overall perspective, is cross-border e-commerce a blue ocean or a red ocean? Or are there differences in different regions, consumption habits, and product types?

Li Chun: It is difficult to simply answer whether cross-border e-commerce is a red ocean or a blue ocean today. Different forms and regions have different situations. But in general, the import and export scale of China's cross-border e-commerce reached 2.4 trillion yuan in 2023, with an annual growth of about 20%; among this 2.4 trillion yuan, almost three-quarters are exports. The double-digit rapid growth benefits from technological progress and challenges to traditional cross-border commercial trade and offline business. In the next few years, I think the entire industry will continue to maintain double-digit growth and there will be several years of development space. Many platform companies have also recognized this and actively support foreign consumers and sellers, which is a positive signal for entering this industry. The largest player in this industry is Amazon. Of course, the emergence of the "Four Little Dragons of China's Overseas Expansion" will also continue to promote the development of cross-border e-commerce.

Secondly, from the perspective of merchants, the development speed and volume of the red ocean or blue ocean in different countries and regions are also different. Europe and the United States are relatively large in volume, with higher customer unit prices and gross profit margins, but the competition among them is also more intense. The buyer users in Southeast Asian and Middle Eastern countries are developing rapidly, which is a young and high-speed developing market.

Finally, when it comes to the form of cross-border e-commerce, it usually refers to the B2C trading model. But in fact, the B2B cross-border model is also developing rapidly, with a lot of opportunities, and it can be said to be a complete blue ocean. Why is it a blue ocean? Because there are many areas that require everyone to innovate and break through. Today's game is not the competition between players, but who can truly create more value.

Dabing: The cross-border e-commerce industry can maintain double-digit growth in the current economic situation, which is in a leading position in other industries. From a micro perspective, there are also many reasons why cross-border e-commerce is worth investing in. First of all, many countries are implementing de-Sinicization policies. For example, the export products of "MADE IN CHINA" are gradually decreasing in offline supermarkets in the United States. However, cross-border e-commerce provides a new channel for Chinese goods to enter these markets through online sales and small-scale crossings. Therefore, in the context of the compression of the traditional export space by macro policies and the increasing demand, cross-border e-commerce has become an important channel for the output of Chinese goods and has reaped the dividends of the times.

In addition, the diversity of cross-border e-commerce is also a significant feature. Facing the huge market of one billion people in countries such as Europe, the United States, and Japan, different regions have different needs, which provides a large number of market opportunities for enterprises. Enterprises can find their own positioning in the segmented market or region, find a world of their own, and achieve rapid growth. Therefore, for the question of "whether it is possible to enter cross-border e-commerce", the answer is yes. Cross-border e-commerce is a high-growth industry. Choose the right direction and work hard, and the effort will be amplified.

From the national level, China needs cross-border e-commerce to promote high-quality products to the international market. From the international environment, China's supply chain has a competitive advantage globally, and the product quality can meet the needs of global consumers and help improve their quality of life. For both emotional and rational reasons, cross-border e-commerce is an industry worthy of attention.

36Kr: In the early stage, cross-border e-commerce mostly started with B2B, and now it is more transforming to 2C. What are the reasons for this shift? What does it reflect behind it?

Li Chun: In the early days of the Internet, both domestically and overseas, the common view was that "the impact of Internet B2B will far exceed B2C". Because in the past, B2B has realized informatization through EDI and supply chain software. The rise of the Internet is expected to reduce costs and lower the threshold, making B2B transactions more inclined to be conducted on the Internet. But this theory ignores the high conversion cost in B2B transactions, and in the pure Internet model, the incremental value of meeting the complex link of B2B is much smaller than that of B2C. B2C transactions are based on goods, as long as the trading supply chain is met, the process is not complicated, and it is more suitable for the Internet information environment.

For DHgate, we still adhere to the original intention and sentiment of B2B. However, when developing the 2B business, we also developed small B customers and found a batch of unique value supply chains for wholesale transactions. Although we did not invest heavily in the market and brand expansion, we also accumulated a batch of 2C users who are willing to continue to buy, consume, and repurchase. These two businesses are complementary.

On the other hand, in view of the demand for Chinese brands to go overseas, DHgate also uses overseas social e-commerce, a channel that has been successful in China but is still developing rapidly overseas, to help Chinese brands connect with overseas Internet celebrities for new brand testing, channel expansion, and supply chain services. DHgate's MyyShop business, in addition to the traditional shelf e-commerce, based on social e-commerce, helps brands expand channels overseas and provides supply chain services, forming a two-wheel drive.

Today, with the development of AI technology and the maturity of the supply chain, the combination of the Internet and AI technology brings the possibility to meet the B2B demand. In the past 20 years, the informatization of B2B cross-border trade has made significant progress. For example, Apple's supply chain has been completely informatized. However, the onlineization of the open ecological transactions between small and medium-sized enterprises overseas and medium-sized brand enterprises in China is still lacking, mainly due to the anti-globalization of trade and political influences. But the unique capabilities of China's supply chain in the market have not decreased, and the demand from overseas markets for us is increasing rather than decreasing.

36Kr: The B2C model highlights the goods themselves, and the popularity of hit products leads many enterprises to flock to become suppliers of a certain single commodity. Will this situation cause enterprises to lose the opportunity to "build a brand"?

Dabing: In the field of cross-border e-commerce, if we exaggerate a bit, perhaps 90% of the companies do not have the ability to build a brand. Brand building requires the accumulation of time and ability, which is a requirement in a different dimension from trading ability. Therefore, trading for popular products is the main activity of most cross-border e-commerce enterprises. Using product selection software to select products and find market hotspots is itself a basic business skill of cross-border e-commerce. Therefore, in the bonus period of traffic demand, enterprises entering the market will find that it becomes easier to sell goods, which is a completely different concept from the later brand building.

Li Chun: Dabing just pointed out that many merchants on the 2C platform lack the ability and resources to build a brand, and I agree with this. Brand building requires a long-term precipitation and a high threshold of marketing ability. Therefore, many cross-border e-commerce enterprises focus on trade and use product selection software to find market hotspots, which is a basic business ability. However, as the traffic bonus period ends, the business model that only relies on traffic advantages becomes increasingly unsustainable because the traffic cost is constantly rising. For any platform, even if there is a short-term bonus, in the long run, sellers must rely on store reputation, user service, and repurchase rate to maintain the business. The repeated purchases of loyal users reduce the traffic cost, and this cumulative growth is crucial for the sustainability of the business. The platform also tends to support merchants who can bring user loyalty.

Secondly, regarding whether the phenomenon of "one becomes popular, and ten follow" can last, I would like to interpret it from another perspective. From a larger environment, if China's supply chain goes overseas and wants to take the branding path, it needs to understand the proportion of the overseas e-commerce market and how to optimize in local services and supply chains. In today's environment, for brands that want to go overseas, it is necessary to serve overseas consumers through China's supply chain, which requires Chinese brands and manufacturers to establish connections with overseas small B merchants. This is why DHgate, after seeing the current situation of 2C competition, chooses to continue to deepen the 2B field, which is of greater significance for domestic supply chain merchants who want to build a brand.

Finally, in the past, the OEM and ODM models were "no business for three years, but a big business once in three years", but these three years were also full of hardships. Although the orders were stable, the profits were limited. Nowadays, powerful manufacturers hope to play a more active role in the supply chain, directly contact consumers through the B2C model, or develop the operations of other small B merchants.

36Kr: In recent years, it is not uncommon for celebrities and well-known anchors to enter the cross-border e-commerce field. What trend does this reflect behind it?

Dabing: I have actually been following Fan Bingbing's account for a long time. We observed that the growth of her fan number shows a trend: Fan Bingbing has transformed from a lofty image to a more consumer-friendly one and has begun to interact with consumers. However, I noticed that her GMV and sales growth do not match her personal IP. I am thinking whether this is due to cultural differences or other reasons. So I reviewed the content produced by Fan Bingbing and roughly found the answer. Although she intends to go overseas, her content production is still biased towards Chinese and the expression habits of Chinese people. In foreign countries, she is still a stranger to the audience, affecting the spread of the content. Another example is that when Xiaoyangge went overseas and appeared in person, it involved issues of cultural differences and local recognition. Therefore, the next generation of e-commerce must focus on content. Currently, not only TikTok but also many traditional platforms such as YouTube and Instagram are transforming towards short videos and content. Content has become the core password of traffic.

These celebrity cases are like amplifiers. They will encounter obstacles in the process of going overseas. We can imagine how difficult it is for ordinary exporters. Therefore, in content production, we should not interfere too much but should rely on local content creators to produce content for us. Combining our supply chain with their content is a practical path to going overseas.

Finally, I would like to share the case of the enterprise Pop Mart, which is also doing IP, but not personal IP. In the process of building its IP, it fully utilizes new traffic according to the style of each country's market. We can see that Pop Mart's market value has returned to hundreds of billions, with an annual growth rate of three digits. Through long-term observation, I found that in the process of localization, Pop Mart did not charge ahead but did a lot of research work behind the scenes, relying on its design and product output capabilities, and cooperating with many content creators to make its business move towards a positive cycle. Therefore, Pop Mart's overseas expansion case is worth studying.

Li Chun: In my contacts in Southeast Asia, North America, and Europe in the past few years, I did learn about the overseas expansion situations of some large and successful domestic MCN institutions and well-known IPs. Dabing's point is consistent with my observation. When going overseas, what is attracted through social media and social e-commerce are overseas consumers, not overseas Chinese. Therefore, domestic IPs and content do not have an advantage overseas, including the popularity of IPs. Our real advantage lies in the systematic and large-scale operation mode of MCN institutions, including the management of Internet celebrities, content review, and expansion and development. But these models cannot be directly transplanted overseas. For example, in China's social e-commerce, webcasts account for a large proportion, usually combined with well-known brands or potential hit products. However, in overseas markets, especially in Europe and the United States, the explosive power of webcasts is not as strong as in China, and more reliance is placed on long-term short-video content for promoting and selling products.

Therefore, we need to combine our professional knowledge with the local actual situation and develop local creators (Creator) to truly integrate with them. Ultimately, the success of China's overseas expansion depends on the advantage of China's supply chain, that is, the combination of Chinese goods. Indeed, many enterprises have found that the input-output ratio in the process of going overseas does not meet expectations, and there are many challenges that need to be closely combined with the local market. Although some teams have adopted a strategy of quick entry and exit, this does not mean that we have no value, but rather that there is a lot of work that needs to be closely combined with the local market.

36Kr: The intergenerational development and the rise of social platforms have given rise to new e-commerce models such as short videos and live broadcasts. What changes have occurred in users' consumption habits? What advantages should sellers seize?

Li Chun: In different countries and regions, the characteristics of consumers are quite different. First of all, in mature European and American countries, the market changes relatively slowly. Offline, they have a strong brand loyalty; online, e-commerce represented by Amazon has established a set of standard service expectations and basic standards. Therefore, the tolerance for new things is relatively low. In Europe and the United States, although the overall scale of social e-commerce is large, its proportion and growth rate in the total e-commerce volume are relatively slow. Social e-commerce in these regions is more rational and does not increase GMV rapidly like live broadcasts. It is usually based on content, such as short videos or valuable content that delves into the industry. For example, Internet celebrities on YouTube or Instagram have loyal fans who will carry out e-commerce activities based on their content.

In addition, in a mature e-commerce environment, social e-commerce can also play two other roles. One is for brand advertising. The new social e-commerce model provides higher efficiency, providing more flexibility and a better ROI than traditional online media such as Facebook and Google. At the same time, it provides a new model at the data level and the content manufacturing level.

On the other hand, if a new product needs to be tested, social e-commerce is also an effective channel. In traditional shelf e-commerce, even if there is a supply chain, there are certain limitations in creating a hit product, and the investment in each product is large. If the product fails to break through the bottleneck and the traffic fails to increase, it cannot be sold. While combined with social platforms, due to its more decentralized and distributed traffic, Internet celebrities can be used for early new product testing, which helps reduce risks.

In the Southeast Asian market, the acceptance and participation of social e-commerce are very high, especially the user participation on platforms such as Facebook, Instagram, and TikTok far exceeds that of other developed countries. In these emerging markets, social e-commerce may reach or even exceed the stable level in China. Therefore, the situation of social e-commerce in each country is indeed different, and strategies need to be formulated according to the characteristics of the local market.

36Kr: According to the report data: More than 70% of sellers are using AI tools to assist in operations. Which tool products have achieved explosive growth?

Dabing: First of all, the cross-border e-commerce industry has a strong Internet attribute, so the entire industry has a high acceptance of new technologies and new tools, and the industry generally embraces new technologies. We also believed that the emergence of AI has brought new opportunities to the industry, especially in solving the pain point of local understanding. From language to images to the market, the application of AI is particularly important.

In the current cross-border e-commerce, goods are mainly displayed to consumers through pictures and text. The text translation technology is very mature, and AI has surpassed humans in the creation of keyword lists.